Loan limit in corporations
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Simcountry is an Online Digital World where you are the President of a country. |
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Loan limit in corporations
When the cash position of corporations becomes negative, they will receive a loan. The loan will be given by either a player who offers loans on the money market or by the world bank if no loans are available from other players.
Loans must be paid back and they carry interest that is paid each game month. The interest rate is 1% per game year if the loan is from another player and 2% to 6%, depending on the total debt, if the loan comes from the world market.
Corporations that keep losing money and are not helped by their owner who can transfer money to the corporation, may bankrupt.
The loan limit for corporations depends on their asset value. There are in fact three loan limits:
If the corporate assets are <0 (technically bankrupt in the real world but not in Simcountry): The corporation will bankrupt is the total of its loans, less the cash it has less the value of the raw materials it has in stock, is >120 B.
This means that the total of loans if much larger (by 120 B), than the total of cash it has plus the value of raw materials.
Also if the corporate assets are <0: The corporation will bankrupt is the total of its loans is >190 B independent of its cash and raw materials.
A corporation will also bankrupt, if the loan total is >500B. This is independent of the corporate assets that may even be positive.
Countries and enterprises can support their corporations, transfer funds into the corporations and repay debt to prevent closings. In case of a closing, the cash of the corporation and the debt of the corporation are inherited by the owner of the corporation. This is either the country or a CEO. {text] Some players are sometimes surprised to see new loans in their country or enterprise while their cash position is positive. These loans are in most cases, the result of corporate bankruptcy.
The debt limits for corporations will be reduced further. The current levels are unrealistically high.
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